A model that shows how dollars flow through markets among households and firms is called the
A)production possibilities frontier.
B)circular-flow diagram.
C)demand and supply diagram.
D)comparative advantage model.

Question

Quizplus · Accepted Answer

The circular-flow diagram is specifically designed to show how money and goods/services flow between households and firms in a market economy, making it the best choice for this question. The production possibilities frontier shows the maximum output of two goods given limited resources, the demand and supply diagram shows the relationship between price and quantity demanded/supplied in a market, and the comparative advantage model shows how countries can benefit from specializing in production based on their relative efficiency.

A Model That Shows How Dollars Flow Through Markets Among